Shandong Chemical Industry Surges to 3 Trillion Yuan in 74 Years

Since 1949, the chemical industry in Shandong Province has undergone significant development and transformation. From the initial 126 chemical enterprises with fixed assets valued at 4.07 million yuan, by 2023, the main business income of large-scale chemical enterprises has approached 3 trillion yuan. The total chemical economy has ranked first in the country for 32 consecutive years, showcasing the remarkable leap and outstanding achievements of Shandong's chemical industry.

Before the establishment of the People's Republic of China, the development level of Shandong's chemical industry was relatively low. However, by 1952, the total chemical output value of the province had increased to 52.7 million yuan, a 1.27-fold growth compared to 1949. The annual production of major chemical products, such as sulfuric acid, caustic soda, pesticides, dyes, and tire casings, has exceeded historical highs.

With adjustments in national investment policies, the Shandong chemical industry entered a relatively stable development phase. The Jinan Fertilizer Plant established the province's first synthetic ammonia production unit with an annual capacity of 800 tons, followed by the commissioning of six small nitrogen fertilizer plants. By 1965, the province's synthetic ammonia output reached 15,500 tons, and nitrogen fertilizer output reached 11,600 tons, marking the end of the province's history without nitrogen fertilizer production.

The Third Plenary Session of the 11th Central Committee of the Communist Party marked a new era in the development of Shandong's chemical industry. The industry entered a new historical development phase, especially as the socialist market economy was gradually established and improved. The focus shifted to deepening state-owned enterprise reforms, strengthening the outward-oriented economy, and promoting technological progress. By 1988, the total chemical output value of the province was growing at an average annual rate of 16.2%.

However, with the rapid development of the industry, structural contradictions within Shandong's chemical sector gradually became apparent. The province quickly adopted structural adjustment measures as a key means to transform the growth model and enhance industry efficiency, achieving significant results.

During the "11th Five-Year Plan" period, by optimizing new increments and activating existing assets, the economic operation quality and efficiency of Shandong's chemical industry significantly improved. In 2008, the sales revenue of the province's chemical industry reached 1.097 trillion yuan, making it the first province in the country to surpass the trillion-yuan mark in chemical economy. By 2010, the sales revenue, taxes, and profits of the chemical industry reached 1.57 trillion yuan, 212.1 billion yuan, and 116.7 billion yuan, respectively, increasing by 204.3%, 128.9%, and 76.9% compared to 2005.

Shandong's chemical sectors, including fertilizers, rubber processing, petrochemicals, and chlor-alkali, are leading in overall scale, technological equipment, economic strength, management level, innovation capability, and market competitiveness. The proportion of products such as organic raw materials, synthetic materials, and efficient low-toxicity pesticides has gradually increased, while the three major industries of petrochemicals, salt chemicals, and coal chemicals have accelerated their industrial chain extensions towards high-end development.

During the "12th Five-Year Plan" period, the Shandong chemical industry placed greater emphasis on upgrading traditional industries, developing strategic emerging industries, nurturing new pillar industries, enhancing independent innovation capabilities, constructing high-level chemical parks, strengthening energy conservation, emission reduction, and carbon reduction, and actively implementing high-end, efficient, and high-quality strategies to promote industrial transformation and upgrading. Building on the economic total that surpassed the trillion-yuan mark during the "11th Five-Year Plan," the main business income of the province's chemical industry reached new heights. In 2012, the main business income exceeded 2 trillion yuan, and by 2015, it reached 2.9 trillion yuan, completing the "12th Five-Year Plan" goals a year ahead of schedule.

Despite these significant achievements, safety and environmental issues have increasingly come to the forefront. In response, the Shandong Provincial Committee and Provincial Government implemented a five-year special action for safety production transformation and upgrading in the chemical industry starting in July 2017. This involved rating and evaluating chemical enterprises and re-certifying chemical parks, leading to the closure of numerous non-compliant chemical parks and enterprises with significant safety and environmental risks that failed to meet rectification standards, promoting green development in the industry.

As this special action progresses steadily, the pace of structural adjustments in Shandong Province has continued to accelerate. In 2020, the province integrated the crude oil processing capacity of 10 local independent refineries amounting to 26.96 million tons and constructed the Yulong Petrochemical 20 million tons/year integrated refining and chemical project. Additionally, 13 refineries with capacities below 2 million tons/year were dismantled on schedule, eliminating 3.96 million tons of capacity. The fertilizer industry eliminated 1.03 million tons of synthetic ammonia capacity, while the tire industry reduced the capacity of bias tires by 17.32 million standard tires.

After undergoing safety and environmental scrutiny, investment in high-end projects in Shandong's chemical industry saw a significant increase. In 2023, investments in the petroleum processing, chemical raw materials, and chemical products manufacturing sectors grew compared to the previous year. High-end projects, such as Wanhua Chemical's ethylene phase II, Dongming Petrochemical's crude oil catalytic cracking for olefins (UPC), and integrated biobased materials, are being accelerated. The first phase of the Yulong Petrochemical integrated refining project is set to commence production smoothly in 2024.

Simultaneously, significant progress has been made in the construction of intelligent chemical parks in Shandong Province. In 2023, the province completed on-site diagnostic assessments for the intelligent transformation of 83 parks and over 1,000 large-scale chemical enterprises, formulating tailored improvement plans for each park and enterprise. Three parks and 20 enterprises were selected as benchmarks for intelligent transformation, and 28 excellent digital transformation solutions were promoted. Guidance was provided for three parks to be included in the eighth batch of national smart chemical parks, accounting for 50% of the total nationwide.

Focusing on creating new productive forces, Shandong Province is solidly advancing the development of high-end chemical industry chains, prioritizing high-end, intelligent, green, and clustered development. Efforts are being made to stabilize growth, strengthen supply chains, and optimize structure, all aimed at creating an "upgraded version" of Shandong's chemical industry, which increasingly plays a stabilizing role in growth.